SDE Multiple vs. Revenue Multiple: What the Gap Reveals About an Industry's Margin

A laundromat's average sale price is 3.70 times its Seller's Discretionary Earnings (SDE). A liquor store's is 3.39 times — nearly as high. Read only the SDE multiple, and the two businesses look like close cousins: both command a premium most Main Street businesses never see. But BizBuySell publishes a second multiple for every industry — sale price as a multiple of revenue — and on that number the two businesses split apart. A laundromat sells for 1.33 times revenue; a liquor store sells for 0.50 times. Put those two figures together and a different picture appears: a laundromat's typical sale converts a much larger share of revenue into the earnings a buyer is actually pricing than a liquor store's does. The SDE multiple alone doesn't tell you that. The gap between the two multiples does.

Two multiples from the same sales

The SDE Multiples by Industry report draws both figures from the same source: BizBuySell's published Business Valuation Multiples by Industry, an average of closed Main Street sales over a trailing five-year window (businesses sold Q3 2021 – Q2 2026, per the site's sourced dataset). About 80% of the businesses behind these figures sold for between $50,000 and $2,000,000.

For every industry, BizBuySell reports:

• SDE multiple — average sale price ÷ SDE
• Revenue multiple — average sale price ÷ gross revenue

Both are computed from the same pool of transactions. They just divide the same sale price by two different denominators.

The arithmetic: dividing one by the other

Because both multiples share the same numerator (sale price), dividing the revenue multiple by the SDE multiple cancels the price out and leaves something else:

revenue multiple ÷ SDE multiple = SDE ÷ revenue

SDE as a share of revenue is, in plain terms, the slice of every sales dollar that showed up as the seller's discretionary earnings in the businesses that actually sold. Run a restaurant's published figures through it: an SDE multiple of 2.18× and a revenue multiple of 0.39× gives 0.39 ÷ 2.18 = 17.9%. In the restaurants that sold in this dataset, roughly 18 cents of every revenue dollar ended up as SDE, on average.

That's a different number than the SDE multiple itself, and it answers a different question. The SDE multiple tells you how a buyer priced a dollar of earnings. This ratio tells you how much earnings a dollar of revenue tends to produce in that industry.

What the full table shows

Running that division across every industry and sector in the dataset produces a wide spread — wider, in fact, than the spread in SDE multiples alone.

At the other end of the table:

The full 43-entry table — every industry and sector average this site tracks — is on the SDE Multiples by Industry report itself; the rows above are the highest and lowest once the revenue multiple is divided into the SDE multiple.

The liquor store and laundromat, side by side

This pair is the clearest illustration of why reading the SDE multiple alone can mislead. Both sit near the top of the entire dataset on SDE multiple — laundromats highest of all 43 entries at 3.70×, liquor stores second-highest at 3.39×. A buyer skimming only that column would price them as similar opportunities. Divide in the revenue multiple, though, and the businesses split: a laundromat's sale implies more than a third of revenue became SDE; a liquor store's implies well under a sixth.

The dataset doesn't say why. BizBuySell's report gives the multiples, not the reasoning behind them, and this site won't fill that gap with a guess dressed up as an explanation. What the numbers do establish, without needing a story attached, is that "high SDE multiple" and "high-margin business" are not the same claim — a business can command a strong multiple on its earnings while converting a comparatively small share of its revenue into those earnings in the first place.

Reading a multiple with this in mind

If you're comparing your own industry's published multiple against another, check both columns before drawing a conclusion. A high SDE multiple by itself tells you buyers pay well for a dollar of this industry's earnings — it says nothing about how many dollars of revenue it typically takes to produce that dollar of earnings. The SDE Multiples by Industry report lists both figures for every industry side by side so you can run this division yourself before assuming a high multiple means a high-margin business, or a modest multiple means a thin one.

The limits of this math

One caveat matters here. BizBuySell's SDE multiple and revenue multiple are each averages taken across the closed sales in an industry — not necessarily the same individual sale's SDE and revenue divided into each other and then averaged. Dividing one published average by the other approximates the industry's typical SDE-to-revenue relationship; it is not mathematically identical to averaging each individual business's own margin. Treat the figures above as a reasonable directional read on how much of an industry's revenue tends to become discretionary earnings — not as an exact statistic for any single sale, including your own.

Frequently asked questions

What's the difference between an SDE multiple and a revenue multiple?

An SDE multiple is a business's sale price divided by its Seller's Discretionary Earnings; a revenue multiple is the same sale price divided by gross revenue instead. BizBuySell publishes both, by industry, from the same set of closed Main Street transactions. The SDE multiple prices earnings; the revenue multiple prices top-line sales, which is why the two numbers move differently across industries.

How do you calculate the implied SDE margin from these two multiples?

Divide the revenue multiple by the SDE multiple. Both are the same sale price divided by a different figure, so dividing one by the other cancels the price and leaves SDE ÷ revenue — the average share of revenue that became discretionary earnings in the businesses that sold. For restaurants, 0.39 ÷ 2.18 works out to about 17.9%.

Why does a liquor store have a high SDE multiple but a low implied margin?

The published data doesn't say. Liquor stores carry the second-highest SDE multiple in this site's entire 43-entry table (3.39×) but one of the lowest implied SDE shares of revenue (14.7%), and BizBuySell's report doesn't explain the reason behind either figure. What the numbers do show, without needing a cause attached, is that a strong SDE multiple and a high-margin business aren't the same thing — check both figures before assuming one implies the other.

Does this tell me my own business's profit margin?

No. This is an industry-wide average drawn from BizBuySell's published transaction data, not a measurement of any specific business — including yours. It's useful for comparing how industries are typically priced relative to their revenue, but your own SDE as a share of your own revenue could sit well above or below your industry's published figure depending on your cost structure, staffing, and pricing. Run your own numbers through the SDE Calculator rather than substituting an industry average for your actual financials.

This guide is for informational purposes only. It is not financial, legal, or business-brokerage advice, and it is not a formal valuation or appraisal. What a business actually sells for is set by a specific buyer, a specific lender, and a specific deal — no article or calculator can know that in advance, and we say so instead of pretending otherwise.

Last reviewed: September 2026 · Against primary sources cited in the body.